States team up for e-buying
- By Dibya Sarkar
- Aug 22, 2001
Colorado and Utah will launch a joint Web-based procurement service soon
that apparently is the first such interstate system.
The neighboring states will test the system in a pilot project beginning
Aug. 27 that will involve three agencies from each state and a combined
40 vendors. If all goes well, more agencies and vendors from both states
will be allowed to join later this year or early next year. Eventually,
the system will be accessible to municipalities and other government entities,
said Richard Pennington, Colorado's state purchasing director.
Under the five-year contract, NIC Commerce, the e-procurement subsidiary
of NIC, is developing the system at no cost to the states. It will recoup
its investment through a 1 percent transaction fee charged to suppliers.
Pennington said that in 1999, Colorado solicited comments from vendors about
building an e-procurement system at no cost to the state. Vendors were concerned
the state wouldn't have enough orders flowing through the system to generate
sufficient revenues, he said, so to minimize the risk, vendors suggested
Colorado build it jointly with one or more other states.
In February 2000, the idea was brought up at the Western States Contracting
Alliance, a consortium of state purchasing directors from 15 western states
that supports multistate contracting for products and services to save money.
Pennington said that because e-procurement was still a new idea, most states
didn't want to commit — except for Utah.
Utah is close to Colorado "in terms of our e-maturity," he said, adding
that both states have similar public procurement rules, making a joint project
a good bet. After a competitive bidding process, the two states signed NIC
Commerce to a contract in January 2001.
Pennington said not only will cities, counties, school districts and other
"political subdivisions" be allowed to join later, but the provision allows
other states to be added to the system in the future. After two years, the
states and NIC Commerce will review the system's performance and possibly
revise the fee structure or try to increase adoption of the system, he said.
Like other states that have developed comprehensive e-procurement systems,
Utah and Colorado hope to get better prices on goods and services, track
orders better, issue electronic bids and quotes, and streamline operations.
But Pennington said officials are also looking at the system as a way to
re-engineer other state government processes, such as making and tracking
travel arrangements, payments and approvals.